Petrobras, pursuant to the material fact disclosed on October 14, 2016, reports that its Executive Board approved yesterday, the review of the pricing policy for diesel and gasoline traded at its refineries, to increase the frequency of price adjustments, which will be effective from July 3, 2017.

The assessment by the Executive Group of Market and Prices (GEMP), composed by the CEO, the Executive Officer of Refining and Natural Gas, and the Executive Officer of Finance and Investor Relations, is that the adjustments that had been practiced since the announcement of the new policy, on October 2016, have not been sufficient to keep up with the increasing volatility in foreign exchange rate and oil and oil products prices, recommending an increased frequency of adjustments.

As such, the company’s marketing and trading technical area will have power to perform adjustments in prices at any time, including daily, provided that the accumulated adjustments per product must be within a given range ( -7% to +7%), considering the Brazilian market average, and in compliance with the margin defined by GEMP. Moreover, any change outside this range will have to be authorized by GEMP.

The approved policy review will allow greater adherence of domestic market prices to the international market in the short term, and will enable the company to compete in a more agile and efficient manner.

It is important to highlight that the principles of the pricing policy, which was approved in October 2016, remain unchanged, taking into consideration the international price parity (PPI), margins that reflects the risks related to the operations, and the level of market share.

Future fuel price adjustments will be disclosed on the Internet, at the company’s website (www.petrobras.com.br/precosdistribuidoras) and on the internal channels of communication to customers.